Tax time can be daunting for some Australians, and some errors will cost you time, money, or even invite unwanted ATO scrutiny. A considerable number of taxpayers make avoidable errors annually, losing their refunds or meritless penalties.
Error 1: Not Claiming Deductions You Can Claim
Australians’ largest error is failing to claim all the deductions that are available to them. The Australian Taxation Office (ATO) allows taxpayers to claim some expenditure that is directly associated with their income-generating. These include work-related travel, uniforms, home office expenses, and even self-education expenses.
For instance, when Australians started working from home, they spent more on electricity, internet, and stationery but did not account for these costs appropriately as a home office deduction. Accurate records in the form of receipts and invoices must be maintained to substantiate your claims and be within compliance.
Others miss less conventional deductions, such as gifts to registered charities or premiums under income protection insurance. If you are not sure what you can claim, you can think about consulting tax lawyers so that you can be sure that you are not missing anything.
Mistake 2: Incorrectly Reporting Income
Another common error is underreporting income. Some taxpayers underreport their income incorrectly, unaware that income sources other than their normal salary—such as freelance work, investments, and government benefits—need to be reported too.
For instance, interest on savings accounts, rental income, and dividends are not reported by certain Australians, and mismatches may ensue if banks cross-match with third-party institution reports. Even gig economy income, for instance, from Airbnb and Uber, is assessable income that needs to be reported.
Incorrect reporting can lead to corrected returns, delayed processing, or penalties if the error is found to be intentional. The ATO offers pre-filled information on MyTax for most taxpayers, but it’s your job to check and report all sources of income accurately. Being thoroughly prepared and having good records is the secret to not getting it wrong here.
Mistake 3: Not Meeting Tax Deadlines
Oversleeping tax deadlines is a simple but costly mistake many Australians make annually. The most common deadline is the October 31 lodgement date for those who aren’t utilising a registered tax agent. Failing to reach this deadline will incur penalties or interest on unpaid tax, an unnecessary burden to your stress.
Australians utilising tax agents typically assume that they do not have to rush, keeping in mind that agents will require sufficient time to prepare and file returns. And if you’ve registered with a tax agent before the deadline, there’s even a provision for a later deadline, but get that assured in advance.
Leave yourself pencil reminders or get email reminders from the ATO to help you stay on top of deadlines. The latest digital tools, including the ATO app, also allow you to get ahead of tax deadlines and be in compliance.
Key Takeaways You Can Act On
It doesn’t have to be hard to steer clear of these tax mistakes—it just needs to be done with a plan and an understanding. Max out on qualified deductions by keeping records straight, report all sources of income truthfully, and never miss a deadline by staying on top of things.
If you’re unsure or confused, don’t fret, you’re not on your own. Dialling a registered tax agent or accessing the ATO online resources will help you get the assistance you need to lodge with confidence. Be proactive about your taxes this year and make sure you’re claiming all your potential refunds and avoiding penalties.
